“We are still in the process of identifying accounts for restructuring and we expect it to be in the low single digits. We have received some requests for restructuring, but they are not significant,” CEO Sumant Kathpalia said in a conference call with journalists.
The bank’s total slippage of only 19 basis points in its loan book or DKK 400. amounted to Rs 495 for recoveries and upgrades of bank had in the quarter ending September. A base point is 0.01 percentage point.
The bank increased total provisions to Rs 4,606 crore up from Rs 2381 crore a year ago including covid related provisions of Rs 2,155 crore, of which Rs 952 crore in the quarter.
Kathpalia said the bank had intensified the provisions but will continuously evaluate their provision position. Higher provisions improved the provision coverage ratio to 77% in September 2020 from 67% in June and 50% in September 2019.
Gross non-performing assets changed only slightly at 2.21% of advances compared to September 2020 against 2.19% the year before. It would have been 2.32% if the Supreme Court continued to report new NPAs were not in place.
IndusInd Bank’s consolidated net result was halved year after year as lending growth slowed and the bank intensified its provisions to deal with uncertainty arising from the Covid 19 pandemic.
Net profit fell to DKK 663 million in the quarter ending September 2020, from DKK 140 million a year ago, when loan growth was a weak 2%, as the bank reduced its large corporate and microfinance book in an attempt to remove its portfolio.
CEO Sumant Kathpalia, the bank is “cautiously optimistic” about growth prospects for the rest of fiscal policy, especially as demand for tractors, car loans, commercial vehicles, secured retail and microfinance loans shows signs of revival.
He reiterated the bank’s position on reports of a merger with Kotak Mahindra Bank, calling it “speculative and malicious”, adding that bank management has the full support of the promoter Hinduja family.
“Our collection efficiency was 94.7% in September and is likely to increase further before December. All high frequency data show that the economy is back to before Covid levels. A good monsoon should also help revive consumer demand. Demand already. tractors are growing at 33%, and we are also seeing good demand for car loans and secured retail, ”said Kathpalia, but gave no guidance on loan growth.
A decline in fee income and the excess liquidity that the bank maintained during the quarter also affected profitability.
Fee income of Rs 1,554 crore in September 2020 was down from Rs 1,727 crore a year ago. The net interest margin or the difference between the return on advances achieved and that paid on deposits of 4.16% increased 4.10% a year ago, but lower than the 4.28% reported in June.
“We had an excess liquidity of 33,000 crore in the quarter and gave 20,000 crore through reverse repo. We chose to be conservative in the quarter and that affected our margins. We will cut our deposit rates to adjust it to market rates this quarter. Said Kathpalia.
The bank went on an aggressive deposit in the last six months after losing some deposits in the quarter ending March. Deposits increased 8% compared to the quarter ending June.